AMI provides consumers with the ability to use electricity more efficiently and provides utilities with the ability to detect problems on their systems and operate them more efficiently. AMI can be leveraged to provide consumers with historical energy consumption data, comparisons of energy use in similar households, dynamic pricing information, and suggested approaches to reducing peak load via in-home displays.

AMI enables consumer-friendly efficiency concepts like "prices-to-devices" to work like this: Assuming that energy is priced on what it costs in near real-time — a Smart Grid imperative — price signals are relayed to "smart" home controllers or end-consumer devices like thermostats, washer/dryers and refrigerators — the home's major energy-users. The devices, in turn, process the information based on consumers' learned wishes and power accordingly. The house or office responds to the occupants, rather than vice-versa. Because this interaction occurs largely "in the background," with minimal human intervention, there's a dramatic savings on energy that would otherwise be consumed.

This type of program has been tried in the past, but without Smart Grid tools such as enabling technologies, interoperability based on standards, and low-cost communication and electronics, it possessed none of the potential that it does today.